Senior Congress leader Jairam Ramesh on Tuesday drew attention to the persistent sluggishness in private corporate investment, even as India’s largest companies have recorded robust profit growth post-COVID. The Congress leader argued that although the government has slashed tax rates and projected an investor-friendly regime, the intended boost to private investment has failed to materialise, acting as a major obstacle to achieving higher real GDP growth.

Jairam Ramesh claims CEA supports Congress’ contention

Sharing an Indian Express report on X, titled ‘Top 500 companies’ profits grew 30% post Covid, but no investments: CEA’, Ramesh noted that the Chief Economic Adviser (CEA) had acknowledged a key concern long raised by the Congress party, that despite significant corporate tax cuts and claims of improved ease of doing business, private investment has not picked up as expected.

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According to the IE report, India’s largest companies saw their profits grow at an annual rate of 30.8% post-COVID, yet capital expenditure and fresh investments have remained muted.

“For some time now, the Indian National Congress has been drawing attention to a fundamental problem preventing the economy from achieving higher real GDP growth rates: the sluggishness in private corporate investment,” Ramesh said.

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He further added, “Tax rates have been slashed and the ease of business has allegedly improved substantially. But the intended consequence of these moves – i.e., a boost in private investment – has refused to materialise.”

‘Stubborn refusal to invest is itself motivated by several factors’

Ramesh pointed out that this “refusal to invest” stems from multiple factors. He listed-

  1. Stagnant real wages and weak demand: Slow consumer demand growth stems from India’s “stagnant real wages crisis.” “In the absence of consumer demand, there is no incentive for India Inc to invest,” Ramesh stated.
  2. ‘ED-CBI-IT raid raj’ fear factor: Aggressive investigations by enforcement agencies have bred “an atmosphere of business uncertainty and widespread fear among the investing community.”
  3. Crony control of key sectors: The Modi government has “facilitated and encouraged” dominance in investment-heavy sectors by favored players. “Modani is the shining example of this cronyism,” Ramesh charged, referring to the Adani Group’s expansive footprint.
  4. ‘Chanda Lo Dhandha Do’ culture: Corporates see little reason to invest independently when “profits can be successfully reaped by making a payment to the Modi Government’s ‘Chanda Lo Dhandha Do’ business counter” – a jab at alleged quid pro quo via political donations.

The Congress communication chief’s salvo comes amid growing scrutiny of India’s post-COVID economic recovery, with concerns over weak domestic demand and concentrated benefits among a few large players. Nageswaran himself urged the private sector to “reflect why it has been reluctant to invest, which in itself might have contributed to demand uncertainty”, the IE had reported.